Reverse Stock Split Calculator











 

What is Reverse Stock Split Calculator?

Reverse stock splits are corporate actions that reduce the number of shares outstanding by consolidating multiple shares in one. This is in contrast to a traditional stock splitting, which increases the number of shares outstanding. Reverse stock splits result in a higher stock value, which can make institutional investors more interested in the company’s shares.

Formula and Calculator:

Reverse Stock Split Calculator allows investors to determine the new stock price after a reverse split. It also calculates how many shares are needed. This calculator uses the following formula:

New Price = Original Price / Stock Split Ratio
New Number of Shares = Original Number of Shares * Stock Split Ratio

Example:

Let’s say a company has a $10 initial price and 100,000 outstanding shares. A reverse stock split is implemented by the company. This means that each 2 shares will be consolidated into 1. The formula below can be used to calculate the new price and shares following the reverse stock split.

New Price = $10 / 2 = $5
New Number of Shares = 100,000 * 1/2 = 50,000

The company’s stock will now be worth $5 per share and there will be 50,000 less shares.

How To Calculate:

Simply enter the stock split ratio, original price and original number of shares into the input fields to use the Reverse Stock Split Calculator. Click the “Calculate” button to calculate the new price, number of shares and split ratio after the reverse stock splitting.

FAQs:

Why do companies implement reverse stock splits?

Companies often reverse stock splits to increase stock prices. This can make shares more appealing to institutional investors.

What does a reverse stock splitting mean for a shareholder?

Reverse stock splits can reduce shareholder shares, but they do not affect the total investment. If a shareholder has 100 shares at $1 per share and $100 total investment, it would be $100. A 1:10 reverse stock split would result in 10 shares for $10 each. However, their total investment would remain at $100.

What is the best or worst thing about a reverse stock split?

Reverse stock splits can have positive and negative consequences for a company. This can raise the stock price and make shares more appealing to institutional investors. However, it can also indicate financial trouble or lack of confidence in the company’s future prospects.

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